Horizontal agreements (i.e. agreements between firms that operate on the same production or commercial level) are likely to affect competition and are subject to EU competition rules, specifically Article 101 TFEU (Treaty on the Functioning of the European Union).

 

Serious forms of competitive restrictions (so-called hardcore restrictions) such as price-fixing, agreed output limitations, or dividing markets or customers are prohibited.

 

But other agreements that have an anticompetitive element can be exempt from the cartel prohibition. The European Commission has a Horizontal Block Exemption Regulation (HBER) for R&D agreements, and a HBER for specialisation agreements. These rules were updated in July 2023, and provide a ‘safe harbour’ for companies to cooperate if they fulfil certain conditions.

 

The threshold for the combined market share that the contracting companies can reach to benefit from a block exemption is 20% (specialisation agreements) or 25% (R&D agreements). If these values are exceeded, R&D and specialisation agreements must be assessed individually in light of an exemption under Article 101(3) TFEU.

 

The European Commission has Guidelines for other types of horizontal agreements that can benefit from this exemption, including for joint purchasing, standardisation, and sustainability agreements.

 

The assessment under Article 101(3) TFEU is carried out through a market analysis which carefully balances the economic pro- and anti-competitive effects of an arrangement. Only when the positive effects outweigh negative ones, an undertaking can be granted exemption from the cartel prohibition despite high market shares.

 

EE&MC has outstanding expertise to perform such analyses to carry out the correct market definition and to show the positive effects of an agreement.